Pensions (Extension of Automatic Enrolment) (No.2) Bill

Jonathan Gullis Excerpts

Committee stage
Wednesday 15th March 2023 Public Bill Committees

[David Linden]

It is, as always, a great pleasure to serve under your chairmanship, Sir Christopher. I congratulate the hon. Member for Stoke-on-Trent North on getting his Bill through Second Reading, and I certainly commit my party to supporting the principles of what he is seeking to achieve.

Automatic enrolment of pensions is not an issue on which I disagree with the hon. Gentleman. It is probably the only issue on which he and I agree these days—that says more about our political differences than anything else. In a similar vein, it would be remiss of me not to pay tribute to the hon. Member for North West Durham (Mr Holden), who initially introduced the Bill before he moved on to the dizzy heights of ministerial office at the Department for Transport.

It would be fair to say that the finer details of pensions policy do not generally get people’s excitement levels rising, although Under-Secretary, the hon. Member for Sevenoaks, the hon. Member for Reading East and I find this stuff quite fascinating and exciting, so we rub along quite nicely. Although there is not excitement around pensions policy, there is scope for more political consensus. I believe that is true of automatic enrolment, which has generally been a success for our society. My only real criticism of AE is that there has not been a big enough attempt to include low earners and those of all ages. The Bill certainly makes great strides towards tackling that inequity, and it should help with some of the structural problems, such as the gender pensions gap, which does not get as much political attention as the gender pay gap.

I have no great desire to detain the Committee for any length of time today. I appreciate that the action is very much elsewhere—of course, I am referring to the local housing allowance debate in Westminster Hall this afternoon. The Minister knows and, I believe, understands my long-standing interest in extending automatic enrolment to everyone over the age of 16, not 22 or even 18, and for it to kick in from the first pound earned. The latter is particularly important for women, especially those who work part time and have not previously hit the threshold.

These are probing amendments. I am sure the Committee will be glad to know that I do not intend to press them to a vote. If Members want to be elsewhere, fear not; I will not press them to a Division. Amendments 1 to 4 seek to amend clause 1 to ensure automatic enrolment in a pension kicks in at the earliest stage—the age at which tax kicks in. They would put on the face of the Bill that automatic enrolment begins to apply from the age of 16, not 18, as the hon. Member for Stoke-on-Trent North proposes. Amendments 2, 3 and 4 are merely technical amendments and are consequential in nature, so I will focus on the thinking behind amendment 1.

We all recognise that there are changes to the labour market, and that people’s employment journeys are changing. Many of us left the Chamber during the Chancellor’s speech when he was just getting on to that section of the Budget. He recognises that there are changes to the labour market. Likewise, the Work and Pensions Committee, on which I sit, is currently undertaking an inquiry into the plan for jobs and is trying to better understand some of the changes behind working practices and economic inactivity.

None of us—not even the Chancellor—has a silver bullet suggestion for how we fix the issues relating to under-25s and over-55s not participating in the labour market at the level they were before the pandemic. Following our recent cross-party trip to the USA, I know that I and others on that Committee certainly see apprenticeships as just one example of how we can offer a different path into the labour market.

That brings me very much to my own experience. When exam results are sent out, we politicians rightly talk about there being no wrong path for people’s employment journeys. Some, after school, move straight into further and higher education. Increasingly—this is my personal belief—they do so sometimes disproportionately for our economy. I use this analogy to explain it to folk: if I have a leaking roof or a leaking pipe, I do not want a doctor or a lawyer—I want a plumber. Perhaps, as an economy, we need to pivot a bit more towards some of the trades.

For others, and I am an example, the path on leaving school is a vocational qualification at first, such as an apprenticeship. It is with that in mind that I have tabled the amendments. We know from House of Commons Library research that, at any one time in the UK, approximately 572,000 people are undertaking an apprenticeship, sometimes for up to four years with the same employer, and from age 16. The Bill before us would exclude those apprentices from inclusion in automatic enrolment. I do not know why that is, especially when they are likely to have four years of contributions.

In responding to these probing amendments, will the Minister outline why the Government’s preference is for age 18 and not 16? Have they undertaken a specific impact assessment to age 16? If so, will they publish it? I know that the Government have published an impact assessment for age 18. It came through within the last hour, and I have looked at it, but it seems to extend only to age 18, not 16.

We all agree that automatic enrolment has been a success and extending it further to younger cohorts is clearly a good thing. On that, we will not disagree, but I do not understand why the proposal is to stop at age 18, not extending it all the way to 16, bringing it in line with the point when income tax kicks in, and including all workers. I very much look forward to the Minister outlining the Government’s rationale, and explaining why they would have any difficulty accepting amendment 1 to what is an otherwise excellent Bill.

[Jonathan Gullis (Stoke-on-Trent North) (Con)]

It is a pleasure to serve under your chairmanship, Sir Christopher. I am grateful to you and to fellow Committee members for joining me today to scrutinise this important legislation, especially on Budget day.

The Bill before us contains two clauses. I am grateful to hon. Members for their support for the expansion of automatic enrolment into workplace pensions, a long-standing public policy objective that enjoys widespread support in this House and the other place, and therefore allowing this Bill to proceed to Committee, despite the lack of opportunity for a debate on Second Reading.

The Bill has a clear and straightforward purpose: to allow the Government to lower the age at which qualifying workers are automatically enrolled into a workplace pension scheme from 22 to 18, and to allow the Government to increase the overall amounts being saved by abolishing the lower earnings limit of the qualifying earnings band for workplace pension contributions.

I acknowledge the work of the Under-Secretary of State for Transport, my hon. Friend the Member for North West Durham (Mr Holden)—my office buddy in this place—who championed a previous Bill in this Session with the same objectives and has handed the baton on to me, to carry forward improvements to retirement provisions for millions of our fellow citizens. He is a doughty champion for people up and down our country, as well as those of North West Durham. We are very lucky to have such a Member in the House.

[The Chair]

Order. The hon. Gentleman may be anticipating that we will get past this group of amendments, and we will then have a debate on clauses 1 and 2. I hope he will address his remarks to the specific amendments that we are debating at the moment.

[Jonathan Gullis]

I am more than happy to do that, and to return later on to the clauses, Sir Christopher.

I thank the hon. Member for Glasgow East for his amendments, which I understand aim to remove the regulation-making power to reduce the age of automatic enrolment, and replace it with a new minimum age of 16 for automatic enrolment and re-enrolment, and make consequential amendments. I am grateful for his explanation as to why he believes a lower minimum age would be beneficial. I would certainly support sitting down and discussing it with him at a later date, but this Bill seeks to amend the legislative framework for automatic enrolment to deliver the measures set out in the 2017 AE review, which considered the matter of a lower minimum age, weighed the evidence and concluded that starting from age 18 was the right approach. I am not convinced by the hon. Member’s arguments to depart from that finding today. As he knows, the Bill gives regulation-making powers to the Secretary of State to lower the age, subject to a statutory review and the use of the affirmative procedure. He will therefore have a further opportunity to make his case to colleagues in this House and other stakeholders when that consultation takes place. I look forward to working with him on that. If I may, I will return to some wider comments—

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

rose—

[The Chair]

Order. We are discussing the amendments only. We will have the opportunity to discuss things more generally when we get to clause stand part.

[Jonathan Gullis]

Thank you, Sir Christopher. I can give way to the hon. Lady—

[The Chair]

Does the hon. Member for Rutherglen and Hamilton West wish to participate in this debate or in the more general debate?

--- Later in debate ---

[David Linden]

I must say that in moving the amendment, I had rather hoped that more consideration and debate would be given to it. With the greatest respect to the hon. Member for Reading East, I am baffled that the Labour party has nothing to say. Perhaps that is consistent with its policy positions these days. It was not that long ago that hordes of young people at Glastonbury were chanting the name of the former Leader of the Opposition, the right hon. Member for Islington North (Jeremy Corbyn). This rather strikes me as a bit odd. I understand that the Government have not always been the kind of folk who tend to have lots of lovely things to say about the labour movement or young people, but I am particularly baffled that this Labour party has nothing to say, nor any explanation as to why it has arrived at this policy position, other than to say, “We agree with that lot.”

With that in mind, I have sought to stimulate debate—rather unsuccessfully—but I look forward to the Bill making progress, I hope. I do not disagree with the Bill itself, as I said, but when we come to later stages I hope that we can agree to improve automatic enrolment further and to give this a little more consideration than it has been given today. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Jonathan Gullis]

Thank you for educating me on Committee procedure, Sir Christopher. I clearly need to read up a lot more in “Erskine May”. I look forward to learning it at a later date.

I put clearly on the record my thanks to the Pensions Minister, my hon. Friend the Member for Sevenoaks. This gives me the opportunity to thank her for securing Government support for the Bill, which she has worked tirelessly behind the scenes to do since entering her office. She has been working to get it into Parliament and, I hope, implemented as quickly as possible to ensure this for young people, apprentices, in particular, two of whom I have in my constituency office. Jessica and Mya are 18, paid well and will now be able to start building up their pension, which is totally brilliant for them. I look forward to having ensured that they provide for themselves in future.

The automatic enrolment framework was introduced by the Pensions Act 2008 and was gradually brought in for all employers across the UK, starting in 2012. By January 2023, 10.8 million people had been automatically enrolled into a workplace pension and 2.2 million employers were complying with their duties, with about an additional £33 billion in real terms saved in 2021, compared with 2012.

In 2017, the Government carried out a year-long review of automatic enrolment, with a panel of independent, expert advisers, resulting in a report, “Maintaining the momentum”, which set out recommendations to expand the workplace pensions framework. The proposed measures were widely supported by parliamentarians, stakeholders—including those representing employers and workers—and of course the pensions industry. The Bill is the first crucial step in implementing those recommendations, in that it will provide the necessary legislative powers. Helping people to save for later life should be one of the Government’s key priorities, particularly as the Bill will have a significant impact on the delivery of long-term investment to areas outside metropolitan London where there are fewer young people in part-time jobs.

--- Later in debate ---

[Jonathan Gullis]

May I put on record my thanks to you, Sir Christopher, and to everyone who has contributed to this short, constructive debate? I thank all Members who agreed to serve on the Committee, in particular the hon. Member for Rutherglen and Hamilton West, who has become a good friend in the House and a done a lot on pensions. Also, he may not want to admit it, but the hon. Member for Glasgow East and I are good friends, but I am sure that he will not put that on any endorsement leaflets any time soon.

[David Linden]

On a point of order, I am sure that the hon. Gentleman does not wish to mislead the Committee inadvertently. We cannot have that on the record; my constituents will deselect me.

[Jonathan Gullis]

I look forward to doing a podcast with the hon. Gentleman very soon to discuss all the great work that he does in the House as a SNP Member.

The Bill makes certain that people in areas such as Stoke-on-Trent North, Kidsgrove and Talke, where nearly one in four people are not auto-enrolled in a pension, will have more financial security in the long term. It will simplify the process to mean that for just a few pounds a week, and through the power of compound interest, people could be £30,000 better off in retirement. That is absolutely transformative, which is why the Bill is critical.

I also thank the hon. Member for Reading East, whom I hugely admire in the House. I assure him that I too will keep the Government’s feet to the fire from the Government Benches so that we get an actual implementation date, because I do not like references to wishy-washy mid-2020s. I want to see a date firmly in writing. I am delighted that the consultation will take place in the autumn and I look forward then to hearing about a firm date.

I want to finish by again thanking my hon. Friend the Member for North West Durham—he deserves another shout-out—for his support throughout the passage of the Bill and for putting the case forward with Onward, a fantastic think-tank, which has done a lot of work with him to put the argument. I am delighted and proud that he was very kind in asking me to carry on his great work as he ascended to higher office and as I descended at the same time. I thank the Minister for getting the Bill supported by the Government, and for how she has worked with me, officials and obviously the Treasury, twisting arms wherever necessary to get the Bill over the line and, I hope, on the statute book.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Question proposed, That the Chair do report the Bill to the House.

[David Linden]

On a point of order, Sir Christopher. I thank you for chairing the proceedings in Committee and pay tribute to the Clerk, Chris Wilson, for his help in drafting amendments. I look forward to the Bill proceeding to the other House.

Pensions (Extension of Automatic Enrolment) (No. 2) Bill

Jonathan Gullis Excerpts

3rd reading
Friday 24th March 2023 Commons Chamber

[Jonathan Gullis (Stoke-on-Trent North) (Con)]

The Bill before us today provides the legislative powers to implement the 2017 automatic enrolment review recommendations to extend automatic enrolment to young adults aged 18 to 21, by introducing powers to lower the age criteria for enrolment and remove the lower earnings limit, which would improve saving levels among low and moderate earners. Taken together, these changes would help improve financial resilience for retirement among young people, women and lower earners. Extending the eligibility age to 18 will support younger workers and provide them with the opportunity to begin saving from the start of their working lives for a more secure retirement.

Removing the lower earnings limit will proportionately benefit the lowest earners the most. Research from Onward shows that roughly 25% of people from Stoke-on-Trent North, Kidsgrove and Talke are not yet auto-enrolled into pension schemes. The Bill tackles that, creating more stability in the long term. For the first time, everyone will get an employer contribution from the very first pound of their earnings if they are enrolled or opt in. That will help to improve the incentive to save, especially for women and those individuals working part time or in multiple jobs.

Automatic enrolment has been and remains a long-term project. It has been successful through the adoption of a carefully staged, systematic and evidence-based approach, which has been supported by the consensus, including cross-party support, in this place. That is the approach on which successful expansion must be based and why the Bill works in the way that it does—to require Ministers to consult before implementing these changes, for example, on the best way and the optimum timetable for doing so. That gives Parliament, employers, workers and other stakeholders a key role in determining how best to implement the expansion of workplace pensions.

People who earn £9,000 from two separate jobs, and who may be working 12 to 18 hours a week, juggling their jobs around childcare or caring responsibilities, do not currently get the benefits of auto-enrolment at all. For part-time workers, auto-enrolment stands at around 60%, compared with almost 90% of workers in full-time jobs. The Bill will see roughly an extra third of the part-time workforce auto-enrolled, which is an increase on the percentage based in Onward’s research.

Further research from Onward suggests that, when this change comes through, it will bring almost £3.5 billion to people in our area for their total life savings. This will be transformative for the lives of everyone not just across our great country but, most importantly, across Stoke-on-Trent North, Kidsgrove and Talke.

The Bill will help to put cash into communities, help people to help themselves, and provide the extra private sector money to deliver the levelling up that we so desperately need. Automatic enrolment is widely and rightly recognised as a success. It has transformed workplace pension saving for millions of workers and is enabling them to save towards greater security in retirement.

What this Bill makes certain is that, in areas such as Stoke-on-Trent North, Kidsgrove and Talke, North West Durham and Consett, where nearly one in four people are not yet auto-enrolled onto a pension scheme, people will have more financial security in the long term. It simplifies the process, and for just a few pounds a week, through the power of compound interest, people could be £30,000 better off in retirement. That is absolutely transformative, which is why the Bill is so critical.

I know that the whole House is proud to support the Bill at this current stage and is committed to this expansion of auto-enrolment to build a more inclusive and stronger savings culture for future generations.

--- Later in debate ---

[Jonathan Gullis]

With the leave of the House, I wish quickly to place a few thank-yous on the record. First, let me thank the fantastic civil servants in the Department for Work and Pensions, many of whom are sitting in the Box today. They have been tremendously helpful to both me and my team in getting the Bill to where we are today. I thank the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Sevenoaks (Laura Trott), for her fantastic work in unblocking the blockages that had previously existed to bringing this legislation forward.

I thank the Opposition Front Benchers, including the hon. Members for Reading East (Matt Rodda) and for Wirral South (Alison McGovern), for all their support, kind words and guidance. I thank the Scottish national party spokesman, the hon. Member for Glasgow East (David Linden), who has championed this measure and is very excited by it. I also wish to thank the Association of British Insurers, the Pensions and Lifetime Savings Association and the TUC for all their fine work, as well as Onward, that fantastic think tank, for the incredible work it is doing, now led by Sebastian Payne.

I also thank my hon. Friend the Member for Castle Point (Rebecca Harris), who does not get enough praise in this House. Without her guidance and stern tongue, I might not sometimes be able to be kept in line enough to make sure that we move things smoothly along. So I am grateful to her for the advice she has provided to get us to this place. I also place on record my thanks to Baroness Altmann, who is going to be taking this Bill on in the other place and guiding it safely through to Royal Assent.

The final big shout-out needs to go to my office buddy, my hon. Friend the Member for North West Durham (Mr Holden), who did all the donkey work, the leg work, for this Bill. I have shamelessly come in and picked it up after he was sent to such high office that I see him only once a week, rather than three or four times a week. I also thank his incredible staff members, Gabriel Millard-Clothier and Robbie Lammas, as well as my own parliamentary researcher, Harry Mahoney-Roberts, and Nathan Purchase in my constituency office, who have suffered with me to get to where we are today. This is a fantastic piece of legislation and it will make a change to many lives in the future.

Question put and agreed to.

Bill accordingly read the Third time and passed.